ESG reporting is the process of disclosing a company’s environmental, social, and governance performance to stakeholders. It covers everything from carbon emissions and resource usage to labour practices and board diversity. As regulations like the CSRD make this mandatory for thousands of European companies, understanding who needs to report, what to include, and how to get started has become essential for staying compliant and competitive.
What is ESG reporting and why does it matter?
ESG reporting is how companies communicate their performance across three key areas: environmental impact (like emissions and resource use), social responsibility (including labour practices and community engagement), and governance structures (such as board composition and ethics policies).
The three pillars of ESG reporting each address distinct aspects of corporate responsibility:
- Environmental pillar: Examines how your operations interact with the natural world, including tracking carbon emissions, managing waste, using resources efficiently, and addressing climate-related risks.
- Social pillar: Looks at how you treat people both inside and outside your organization, covering workplace diversity, fair labour practices, community impact, and supply chain ethics.
- Governance pillar: Focuses on how your company is run, including board structure, executive compensation, risk management systems, and ethical business conduct.
Together, these three pillars create a comprehensive picture of your organization’s sustainability performance and corporate responsibility. By addressing environmental stewardship, social impact, and ethical governance in tandem, ESG reporting provides stakeholders with a holistic view of how your company operates beyond traditional financial metrics, enabling more informed decision-making about long-term value creation and risk management.
ESG reporting has shifted from “nice to have” to “must have.” Investors increasingly use ESG data to make funding decisions, recognizing that companies with strong ESG performance demonstrate better long-term resilience. Regulatory bodies across Europe have made ESG disclosure mandatory for many organizations, and stakeholders now expect transparency about corporate impact.
Who is required to do ESG reporting?
Under the Corporate Sustainability Reporting Directive (CSRD), over 42,500 companies headquartered in the EU must produce detailed ESG reports. The requirements focus on company size, listing status, and operational scale:
- Large companies: Organizations exceeding two of three thresholds (more than 250 employees, €40 million in revenue, or €20 million in assets) fall under CSRD obligations.
- Listed companies: All companies traded on EU-regulated markets must comply with CSRD requirements, even if they fall below the size thresholds.
- Non-EU companies: Businesses headquartered outside the EU with significant European operations (generating over €150 million in EU revenue and having at least one subsidiary or branch in the EU) also face CSRD obligations.
These criteria cast a wide net across the European business landscape, capturing not only major corporations but also mid-sized enterprises and international players with substantial EU market presence. The CSRD’s scope ensures that a significant portion of economic activity within Europe operates under consistent sustainability disclosure standards, creating a level playing field for transparency and accountability regardless of company origin or structure.
The CSRD implementation follows a phased approach. Larger companies began applying these rules in 2024 for their 2025 reports, while smaller listed companies will gradually come under the requirements in subsequent years.
Even if your business doesn’t directly meet CSRD thresholds, you might face reporting expectations if you’re part of the supply chain for companies that do. Large corporations increasingly request ESG data from their suppliers to complete their own comprehensive reports.
What actually goes into an ESG report?
An ESG report contains detailed disclosures across all three pillars, structured according to frameworks like the European Sustainability Reporting Standards (ESRS) under CSRD.
For the environmental component, companies must report:
- Emissions data: Direct emissions from operations (Scope 1), indirect emissions from purchased energy (Scope 2), and value chain emissions (Scope 3).
- Climate risks: Both physical risks (how climate change might affect your operations) and transition risks (how the shift to a low-carbon economy impacts your business model).
- Resource usage: Water consumption, energy use, waste generation, and raw material inputs, accompanied by strategies for reducing environmental impact.
- Biodiversity impact: How your operations affect natural ecosystems and measures taken to protect or restore biodiversity.
These environmental disclosures paint a complete picture of your company’s ecological footprint and climate readiness. By reporting across emissions, risks, resource consumption, and biodiversity, you demonstrate not only your current environmental impact but also your preparedness for future environmental challenges and your commitment to reducing harm. This comprehensive environmental transparency helps stakeholders assess both your contribution to global sustainability challenges and your resilience in the face of climate change and resource scarcity.
The social pillar demands transparency about:
- Labour practices: Working conditions, health and safety records, employee training, fair compensation, and labour relations.
- Diversity metrics: Gender balance, ethnic diversity, age distribution, and disability inclusion across all organizational levels.
- Community impact: How your operations affect local communities and your engagement with stakeholders.
- Supply chain considerations: Labour practices and human rights throughout your supply chain, including due diligence processes.
Social reporting reveals how your organization treats its most important asset—people—and how it contributes to societal wellbeing. From ensuring safe, equitable workplaces and fostering diverse talent pools to maintaining ethical supply chains and supporting local communities, these disclosures demonstrate your commitment to human rights and social justice. Strong social performance indicates not only ethical operations but also reduced reputational risks, better employee retention, and stronger relationships with communities where you operate.
Governance disclosures include:
- Board structure: Composition, diversity, expertise, and independence of your board members, and how sustainability considerations are integrated into board oversight.
- Ethics policies: Anti-corruption measures, whistleblower protections, conflicts of interest management, and business conduct standards.
- Risk management: How you identify, assess, and manage ESG-related risks and integrate sustainability risks into enterprise risk management.
- Executive compensation: How ESG performance metrics are linked to executive pay.
Governance reporting demonstrates the integrity of your leadership and decision-making frameworks. By disclosing board composition, ethical safeguards, risk management processes, and performance incentives, you show stakeholders that sustainability is embedded in your organizational DNA rather than treated as an afterthought. Strong governance structures ensure that ESG commitments translate into concrete actions, that risks are properly managed, and that leadership accountability extends beyond financial performance to encompass broader environmental and social responsibilities.
The CSRD framework structures these disclosures around double materiality, meaning reporting both how sustainability issues affect your company’s financial performance and how your business activities impact society and the environment.
How do you get started with ESG reporting?
Beginning your ESG reporting journey requires a structured approach with several key steps:
- Understand your obligations: Determine which regulations apply to your organization based on size thresholds, listing status, and geographic footprint to ensure you’re preparing for the right requirements.
- Conduct a materiality assessment: Identify which ESG topics matter most to your business and stakeholders using CSRD’s double materiality approach, examining both financial impacts on your company and your impacts on society and the environment.
- Identify data gaps: Audit what information you currently collect versus what reporting requires, pinpointing where you lack the necessary metrics or measurement systems.
- Build data collection systems: Create cross-departmental workflows that bring together information from finance, operations, HR, and procurement consistently, establishing clear processes for gathering, verifying, and managing ESG data.
- Establish governance structures: Assign clear ownership for ESG reporting, create oversight committees, and ensure senior leadership engagement to embed accountability throughout the organization.
Successfully launching your ESG reporting program requires treating it as a strategic transformation rather than a one-time compliance project. By methodically working through these foundational steps—from understanding regulatory scope to building robust data infrastructure and governance—you create a sustainable reporting capability that evolves with your business. This structured approach not only ensures regulatory compliance but also generates valuable insights that can improve operational efficiency, strengthen stakeholder relationships, and identify new opportunities for sustainable growth.
Common challenges include securing buy-in from leadership, allocating sufficient resources, and managing the workload alongside business-as-usual activities. Organizations that succeed typically treat ESG reporting as a strategic priority rather than just a compliance exercise.
Getting expert help with ESG reporting
If you’re feeling overwhelmed by ESG reporting requirements, you’re not alone. At Dazzle, we connect you with pre-screened CSRD experts and sustainability reporting consultants who can guide you through every stage of the process. Whether you need help with materiality assessments, data collection systems, or preparing compliant reports, our flexible approach means you can access the right expertise exactly when you need it. We can match you with specialists within 48 hours, giving you the support to meet tight deadlines without the bureaucracy of traditional consultancies.
If you are interested in learning more, reach out to our team of experts today.
